Agency in Crisis…Government Loses Millions in Revenue from Oil Companies

Wednesday, September 16, 2009

Yet again the Minerals Management Service (MMS) has been criticized for improperly collecting what is owed to the federal government by oil and gas companies that drill on federal lands. The Government Accountability Office investigated the MMS’ Royalty-In-Kind (RIK) program which allows companies to pay royalties in the form of crude oil or natural gas instead of cash, and the GAO report found that agency officials did not know for certain how much it was owed. All they knew was the amount was at least $21 million.

The investigation also discovered that the MMS doesn’t audit RIK gas operators’ records, so there’s no way to tell if the government is actually getting the correct volumes of in-kind deliveries. Nor have officials bothered to establish adequate policies and procedures to resolve imbalances between agency and company records. The MMS could also use more staff to do its job properly, the GAO concluded.
-Noel Brinkerhoff
Can a Failed Agency be Trusted to Oversee Oil Industry? (by Noel Brinkerhoff and David Wallechinsky, AllGov)


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